Ford Motor Credit Company reported net income of $401 million in the second quarter of 2003, up $71 million from earnings of $330 million in the same period a year earlier. On a pre-tax basis, Ford Credit earned $661 million in the second quarter of 2003 compared with $519 million in the second quarter of 2002. The increase in earnings primarily reflects higher income related to securitizations and a lower provision for credit losses, offset partially by the impact of lower receivables.

Compared with the first quarter of 2003, earnings were down $41 million, reflecting primarily lower gains on sales of finance receivables, offset partially by higher financing margins.

"In this challenging environment, Ford Credit continues to provide stable performance," said Greg Smith, Chairman and CEO. "We have made progress on several fronts this quarter, and we continue to focus on the basics of our business by providing support for our dealers and positive results for Ford Motor Company."

On June 30, 2003, receivables on Ford Credit's balance sheet totaled $134 billion, down $8 billion from June 30, 2002. The reduction primarily reflects lower retail and lease placement volumes, and higher sales of receivables in whole-loan sale transactions, offset partially by the accounting consolidation of a Ford Credit asset-backed commercial paper program. Managed receivables were $190 billion on June 30, 2003, compared with $207 billion on June 30, 2002, and $193 billion on March 31, 2003.

In June 2003, Ford Credit paid a dividend of $900 million, resulting in managed leverage of 12.9 to 1 on June 30, 2003.

Ford Credit is a wholly owned subsidiary of Ford Motor Company. Now in its 44th year, Ford Credit provides vehicle financing in 36 countries to more than 11 million customers and more than 12,500 automotive dealers. More information can be found at www.fordcredit.com and at Ford Credit's investor center, www.fordcredit.com/investorcenter/.

DEARBORN -- Ford Motor Co. made $417 million, or 21 cents a share, in the second quarter as the automaker's cost-cutting efforts helped offset rising rebates.

The profits come on top of the $896 million Ford earned in the first three months of the year, a sign the company's turnaround plan is gaining some traction.

"Our second quarter financial performance and our achievements in the past 18 months since we announced our revitalization plan demonstrate that we are delivering the results that are needed to keep the company solidly on track," said Chairman and CEO Bill Ford Jr.

Rebates, cut-rate financing and other incentives rose to record levels in the April-June time period, making it very difficult for Detroit's automakers to operate profitably. Ford's average consumer incentive per vehicle has risen to $3,400, nearly 50 percent higher than a year earlier. DaimlerChrysler AG's Chrysler Group has already said it would lose $1.3 billion when it reports second quarter results next week.

Ford said Wednesday it has cut $1.9 billion in costs this year -- three times its original goal -- through a companywide push for austerity.

The results, though, still fell below last year's second quarter income of $570 million, or 29 cents a share.

Ford's North American automotive operations reported a profit of $445 million on a pre-tax basis, compared with a pre-tax profit of $921 million in the second quarter of 2002. The decline reflected lower production volume and lower net pricing, offset partially by strong cost performance.

North America automotive revenue in the second quarter of 2003 was $20.7 billion, down about 10 percent from $23.1 billion in the second quarter of 2002.

Ford Credit reported net income of $401 million in the second quarter of 2003, up $71 million from earnings of $330 million in the same period a year earlier.

The gains, however, were mitigated by Ford's European operations, which incurred a pre-tax loss of $525 million in the second quarter of 2003, compared with a pre-tax loss of $18 million during the same period a year ago.

Ford said it expects a loss of about 15 cents a share in the third quarter, reflecting lower planned production volumes in the third quarter. The company remains committed to its full year earnings guidance of 70 cents a share.

Once again, we have proven that we are committed to our financial milestones," said Allan Gilmour, vice chairman. "We continue to surpass our cost performance targets, and we continue to strengthen the balance sheet. We are focused on achieving our goals and are working through the significant challenges we face during the second half of the year and 2004."

Stacy94PGT
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